Internet gambling group Tipp24 has reported reduced profits for a second consecutive quarter, blaming increased costs in the ramping up of new businesses.
On Thursday the company adjusted its forecast for FY 2014, estimating that it will grow revenues by between Euro 135 and Euro 145 million, and expects a reduced EBIT of Euro 15 to Euro 25 million.
In the first half of 2014, Tipp24 generated revenues of Euro 68.2 million (H1-2013 Euro 76.4 million). Consolidated EBIT came in at Euro 6 million, falling well short of the same period last year, when Euro 21,4 million was achieved.
This was attributed mainly to increased personnel and other operating expenses as well as a high winning payout of MyLotto24 Limited of around Euro 6.7 million in March 2014. The EBIT margin declined from 28.1 percent to 8.8 percent.
The company reports that customer activity and thus revenues were negatively affected towards the end of the second quarter by the World Cup football championship, which distracted players from participating in lotteries, along with unusually good weather and a very low frequency of relevant jackpots.
The lower operating result and a higher tax rate resulted in a consolidated net profit in H1-2014 of just Euro 1.5 million, well below the Euro 15.4 million achieved in the previous year.
Dr. Hans Cornehl, CEO at Tipp24 SE, said: “Even against the backdrop of a seasonally slower business in the first half of the year and time delays in the ramp-up of new business fields, we remain confident to achieve our growth targets for 2014. However, costs will be higher than anticipated in the full year, even if the larger share of these cost increases will not be permanent.”